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Viktor [21]
3 years ago
5

. AEC Company issues common stock that is expected to pay a dividend over the next year of $2 at a stock price of $20 per share

today. If its WACC is 12% and the company is financed by 30% debt and 70% equity, calculate the expected growth rate of dividend (=g), given the cost of debt is 5% and tax rate is 0%?
A) 5.0%

B) 7.0%

C) 9.0%

D) 12.0%
Business
1 answer:
8090 [49]3 years ago
4 0

Answer:

A) 5.0%

Explanation:

AEC Company expects to pay a dividend over the next year of $2 at a stock price of $20 per share, thus the dividend rate over next year = $2/ $20 = 10%

The WACC is 12%, the company is financed by 30% debt and 70% equity, and the cost of debt is 5%;

WACC 12%= 30% x cost of debt 5% + 70% x cost of equity  

->Cost of equity = (12% -30%*5%)/70% = 15%

Thus expected growth rate of dividend = Cost of equity 15% - dividend rate over next year 10% = 5%

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Martinez Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $166,900 to $19
kolezko [41]

Answer:

<u>monthly flexible budget for each $11,100 increment </u>

Sales                                                               $11,100

Less Sales Commissions ( $11,100 × 6%)       ($666)

Net Sales                                                       $10,434

advertising ( $11,100 × 5%)                              ($555)

traveling ( $11,100 × 4%)                                  ($444)

delivery ( $11,100 × 2%)                                   ($222)

Net Income                                                     $9,213

Explanation:

Consider Only the incremental costs and revenues.Fixed costs are not relevant for the $11,100 increment

<u />

4 0
3 years ago
Clarifying the issues of a problem is the _____ step in the problem solving process.
solmaris [256]

Answer:

hii there

The correct answer is option ( A )

8 Step Problem Solving Process

Step 1: Define the Problem. What is the problem?

Step 2: Clarify the Problem.

Step 3: Define the Goals.

Step 4: Identify Root Cause of the Problem.

Step 5: Develop Action Plan.

Step 6: Execute Action Plan.

Step 7: Evaluate the Results.

Step 8: Continuously Improve

Explanation:

Hope it helps

have a nice day

8 0
3 years ago
A ________ transaction in the interbank market is the simultaneous purchase and sale of a given amount of foreign exchange for t
miskamm [114]

Answer:

Explanation:

A swap transaction in the inter bank market is the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates. The purchase and sale are with the same counterpart. A swap may be considered a technique for borrowing another currency on a fully collateralize basis.

3 0
3 years ago
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Lelechka [254]

Answer:

$606,375

Explanation:

The computation of the amount of cash payments to stockholders is shown below:

= Beginning dividend payable  + cash dividend declared - ending dividend payable

= $167,625 + $585,000 - $146,250

= $606,375

We simply added the dividend declared amount and deducted the ending dividend payable to the beginning dividend payable so that the accurate amount can come.

5 0
3 years ago
When a celebrity receives extra compensation for winning an award, this compensation is referred to as a
kogti [31]
A paycheck for the work of course


5 0
3 years ago
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